ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
KENNETH D. REED JEFFREY A. MODISETT
ABRAHAMSON, REED & ADLEY ATTORNEY GENERAL OF INDIANA
TED J. HOLADAY
DEPUTY ATTORNEY GENERAL
MONARCH STEEL CO., ) ) Petitioner, ) ) v. ) Cause Nos. 45T10-9610-TA-00134 ) 45T10-9506-TA-00055 STATE BOARD OF TAX COMMISSIONERS, ) ) Respondent. ) _____________________________________________________________________FISHER, J.
ON APPEAL FROM THE STATE BOARD OF TAX COMMISSIONERS_____________________________________________________________________ September 24, 1998 FOR PUBLICATION
business personal property for the 1987, 1988, 1990, 1991, 1992, and 1995 tax years.See footnote 2
commerce exemption for its business personal property. See Ind. Code Ann. § 6-1.1-
10-29 to 30 (1989 & West Supp. 1998).See footnote 4
The 1987, 1988, and 1990 assessments were
remanded to the State Board for further consideration in Monarch III. By agreement of
the parties, Monarch's assessments for the years 1991 and 1992 were also included in
the Monarch III remand hearing held on March 7, 1994. Subsequently, Monarch
appealed its 1995 assessment raising the same issue. The 1995 assessment hearing
was held by the State Board as a separate matter on June 12, 1996.
The State Board issued its final determination on the Monarch III remand hearing on April 28, 1995. The State Board issued its final determination on the 1995 assessment on August 30, 1996. In both matters, the State Board determined that Monarch was not entitled to the exemption. Monarch then filed original tax appeals with this Court in both matters. The parties agreed to consolidate the issues arising from the Monarch III remand hearing with the issues from the 1995 assessment hearing for the Court's consideration. A trial was held on the consolidated causes in September 26, 1997. Additional facts will be supplied as necessary.
the scope of its authority. Garcia v. State Bd. of Tax Comm'rs, 694 N.E.2d 794, 795-96
(Ind. Tax Ct. 1998)
. The Court will reverse a final determination by the State Board
only if it is unsupported by substantial evidence, constitutes an abuse of discretion,
exceeds statutory authority, or is arbitrary or capricious. Id. Moreover, tax exemptions
are strictly construed against the taxpayer and in favor of taxation. See Sangralea
Boys Fund, Inc. v. State Bd. of Tax Comm'rs, 686 N.E.2d 954, 956 (Ind. Tax Ct 1997),
review denied; see also Trinity Episcopal Church v. State Bd. of Tax Comm'rs, 694
N.E.2d 816, 818 (Ind. Tax Ct. 1998); see
also Alte Salems Kirche v. State Bd. of Tax
Comm'rs, 694 N.E.2d 810, 812 (Ind. Tax Ct. 1998);
see also Department of State
Revenue v. Fort Wayne Nat'l Corp., 649 N.E.2d 109, 113 (Ind.), cert. denied 116 S. Ct.
transit to a final destination and is kept in its original package. Id. In other words, a
taxpayer is entitled to the exemption only if the taxpayer does no processing of the
inventory when it is in Indiana. Id.; see also Monarch III, 611 N.E.2d at 714. Monarch
argues that it has told the State Board year in and year out, from day one, that
everything cut to squares and rectangles is cut that way for ease of shipment and
handling; and the stuff cut for the template is cut so we can sell it to the customer and
has nothing to do with ease of shipment and handling. (Tr. at 25). In support of its
position, Monarch provided the State Board's hearing officer with a box of invoices that
were alleged to be invoices for steel that was not processed (template cut) by
Monarch. The State Board argues, however, that Monarch has not provided it with
sufficient evidence to prove that it is entitled to the exemption. Specifically, the State
Board asserts that there is no basis for an assumption that all inventory which is not
template cut is exempt. Further, the State Board asserts that Monarch's evidence
(the box of invoices) was insufficient to prove that it was entitled to an exemption. First,
the State Board claims that some of the invoices in the box included special template
cut steel orders. Second, the State Board argues that Monarch simply filled the box
with invoices and left the State Board's hearing officer to sift through the pile to
determine what was exempt and what was not.
In order for Monarch to gain an exemption for an item of inventory, Monarch must present evidence that proves that the item falls within the requirements of a
particular exemption provision. See Rotation Prods. Corp. v. Department of State
Revenue, 690 N.E.2d 795, 798 (Ind. Tax Ct. 1998); see also Sony Music v. State Bd. of
Tax Comm'rs, 681 N.E.2d 800, 801 (Ind. Tax Ct. 1997); see also Monarch IV, 669
N.E.2d at 201; see also Dav-Con, Inc. v. State Bd. of Tax Comm'rs, 644 N.E.2d 192,
194 (Ind. Tax Ct. 1994); see also Mid-America Mailers, Inc. v. State Bd. of Tax
Comm'rs, 639 N.E.2d 380, 386 (Ind. Tax Ct. 1994); see also Greensburg Motel Assoc.,
L.P. v. Department of State Revenue, 629 N.E.2d 1302, 1304 (Ind. Tax Ct. 1994);
also Monarch III, 611 N.E.2d at 714
see also Harlan Sprague Dawley, Inc. v.
Department of State Revenue, 605 N.E.2d 1222, 1225 (Ind. Tax Ct. 1992)
Monarch must show that it has complied with all the procedural requirements for
claiming the exemption. See Monarch III, 611 N.E.2d at 714; see also Monarch II, 545
N.E.2d at 1153-54 (noting requirement that Monarch must maintain records that reflect
the specific type and amount of personal property claimed to be exempt"); see also
generally Ind. Code Ann. §§ 6-1.1-11 (West 1989); see also Ind. Admin. Code tit. 50, r.
4.2-12-1, 3 (1992) (presently codified at id. r. 4.2-12-1, 3 (1996)). Having now
explained the standard of review, and having previously defined packaging of
Monarch's product, this Court now turns to the present case and to the evidence
presented to the State Board and this Court.
In the case at bar, Monarch provided the State Board with a box of invoices that it claims proved the steel was not template cut. However, Monarch did not review the invoices with the hearing officer, nor did Monarch attempt to aid the hearing officer in understanding the terminology used on the invoices. Monarch provided no explanation
to the hearing officer regarding why its inventory (represented by the invoices provided)
satisfied any of the exemption provisions.
The State Board must be able to corroborate the taxpayer's evidence to determine whether that evidence proves what the taxpayer claims. In fact, the State Board is required to attempt to do so. See Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1235 (Ind. Tax Ct. 1998); see also Western Select Properties v. State Bd. of Tax Comm'rs, 639 N.E.2d 1068, 1075 (Ind. Tax Ct. 1994). However, the State Board is not required to make the taxpayer's case for him. See North Park Cinemas, Inc. v. State Bd. of Tax Comm'rs, 689 N.E.2d 765, 769 (Ind. Tax Ct. 1997); see also Clark, 694 N.E.2d at 1235. To provide the State Board with a box full of papers and leave the State Board to sift through them to determine what is exempt and what is not is insufficient to provide the necessary evidentiary support for an exemption. The taxpayer has the responsibility to present sufficient evidence to corroborate its claims to the State Board.
Nevertheless, in an effort to discharge its duty to examine Monarch's evidence, the hearing officer chose to select a random sample of thirty invoices for review.See footnote 6 6 Of the thirty selected invoices, six clearly contained evidence of orders for special cuts or
processing. (Tr. at 38). Other invoices in the sample contained vague descriptions of
Monarch's activities such as saw cut, burn, and flame cut. (Tr. at 39). The hearing
officer was unsure whether these instructions were, or were not, orders for special cuts
for a customer. The hearing officer asked Monarch for more information regarding
these vague invoices but received no response. (Tr. at 40). Therefore, the hearing
officer determined that Monarch's evidence was insufficient to prove entitlement to the
exemption. This Court cannot say that this determination is arbitrary or capricious or
an abuse of discretion.
Although it is not for this Court to explain to each taxpayer how to prove its case, it is clear that when a taxpayer does nothing more than provide the hearing officer with a box of invoices, along with self-serving claims that the invoices support its case, that the taxpayer has failed to present sufficient evidence to support its position. Further, the Court would note that it has not been provided with the invoices the taxpayer claims support its position. Since the Court is to review the evidence considered by the State Board to determine whether it was properly considered, and since that evidence has not been provided to this Court, the Court cannot hold that the State Board abused its discretion or was arbitrary or capricious. The taxpayer had the opportunity before this Court to prove that the State Board's decision to deny the exemption was not supported by substantial evidence. It did not do so.
exemption. Accordingly, the State Board's final determination is AFFIRMED.
Therefore, this Court will not discuss the 1989 assessment in this opinion.
product to sell to the customer or cuts its steel to make it easier to ship. Id. The former is processing, the latter is packaging. Id.
Converted by Andrew Scriven